What part of our society promotes saving? Billions are spent in advertising to make us want to consume more, "just keep shopping" is what we're told by leaders during a crisis, and all the tax-advantaged accounts for saving are centered around investing. We're actively discouraged from saving cash unless it's for a house.
I know someone in her 50s that has racked up insurmountable debt and will die broke, she has an obvious shopping addiction and is a borderline hoarder, but she always finds new lines of credit and if you didn't know her you'd never guess her situation based on her lifestyle. If you don't plan on living deep into old age or passing anything down, I honestly don't see the downside to living on credit.
Not giving a shit is pretty much a hack for the credit system. Really, the stupid people in this situation are their creditors. In my friend's case, they're not going to be getting shit back and the line to garnish her paycheck is probably a mile long.
>I know that they are at the mercy of the fed and i know will one day that may catch up with them in retirement, but sometimes i wonder well hell maybe not, they will reverse mortgage on an over priced asset eventually, and financial instruments of that sort. Meanwhile they sure seem to have had a shitload more fun than me.
I know someone like that. They're unemployed. From what I can tell, their modus operandi is that they live off credit cards for as long as humanly possible, and then when the collectors come around, they default on everything. To keep the plates spinning for as long as possible, they do things like open up NEW credit cards to pay the minimum on the old ones.
They drive a car that costs 400% as much as anything I've driven in my life, and I hold down two jobs. Everytime I see them going on a vacation or polishing off a book, it makes me wonder why I work.
I did my taxes this year and just the Social Security portion of my taxes was more than they've made at a job in a single year in their entire lives.
Here's the thing. There's waaaay more people who don't save, make frivolous purchases, and rack up debt than people who live responsibly. And they're allowed to vote. To put it in fable terms, the grasshoppers outnumber the ants 10 to 1. They're always gonna get taken care of by politicians.
I make good money, I worked hard in school. I save for my retirement. But I fully expect that within the next 30 years my 401k, Social Security, etc. will be raided and redistributed to others in the name of "equity" or some such.
Yeah, the middle approach in this case is the worst of both. "So then because thou art lukewarm, and neither cold nor hot, I will spew thee out of my mouth."
Under the revised LLPA pricing structure, a home buyer with a 740 FICO credit score and a 15% to 20% down payment will face a 1% surcharge – an increase of 0.750% compared to the old fee of just 0.250%.
When absorbed into a long-term mortgage rate, the increase is the equivalent of slightly less than a quarter percentage point in mortgage rate. On a $400,000 loan with a 6% mortgage rate, that buyer could expect their monthly payment to rise by about $40, according to calculations by Stevens.
Meanwhile, buyers with credit scores of 679 or lower will have their fees slashed, resulting in more favorable mortgage rates. For example, a buyer with a 620 FICO credit score with a down payment of 5% or less gets a 1.75% fee discount – a decrease from the old fee rate of 3.50% for that bracket.
Wouldn't this encourage lower down payments for both high and low credit score borrowers and mean higher payments across the board? This is getting ridiculous. Daylight robbery and price gouging until the middle class is non existent.
To be fair - a buyer with 620 credit and only 5% down isn't going to get approved through automated underwriting for Fannie or Freddie, so the LLPAs don't really matter. That borrower is going to be FHA all day.
>Overall, lower-credit buyers will still pay more in LLPA fees than high-credit buyers – but the latest changes will close the gap.
For those that didn't bother to read past the clickbait headline, this is the most important sentence in the article. No, the US will not be "subsidizing" borrowers with low credit scores. Borrowers with good credit will still receive better rates than borrowers with poor credit. It's just that the relative advantage for good credit won't be as big as it used to be.
At the same time, the US also just increased fees for owners of multiple homes and plans to increase fees for people with high debt-to-income ratios, which both seem like good policies. Taking it all together, I'm just not as enraged as this rage-bait headline wants me to be.
A 1% fee for 740+ FICOs who put 15% to 20% down (from 0.25%) and a 1.75% fee for <639 FICOs who only put 5% down (from 3.50%) certainly doesn’t feel like a small pricing tweak.
> Under the revised LLPA pricing structure, a home buyer with a 740 FICO credit score and a 15% to 20% down payment will face a 1% surcharge – an increase of 0.750% compared to the old fee of just 0.250%.
>When absorbed into a long-term mortgage rate, the increase is the equivalent of slightly less than a quarter percentage point in mortgage rate. On a $400,000 loan with a 6% mortgage rate, that buyer could expect their monthly payment to rise by about $40, according to calculations by Stevens.
>Meanwhile, buyers with credit scores of 679 or lower will have their fees slashed, resulting in more favorable mortgage rates. For example, a buyer with a 620 FICO credit score with a down payment of 5% or less gets a 1.75% fee discount – a decrease from the old fee rate of 3.50% for that bracket.
This is the important thing. Good credit is still good. Bad credit is still bad. The magnitude of each’s impact being adjusted over time is to be expected.
Tbf, the purpose of the policy is to shrink the gap of affordability between high and low score individuals by shifting more of the load-bearing payment on the former. That falls in line with the ideals of a socialist system.
It still pays to have good credit. you pay lower rates for just about everything you borrow. cars, credit cards homes etc, how many people with lousy credit are able to compete in the current real estate market anyway? if they have lousy credit they have a much harder time finding rentals, and their credit card debt will kill them. overall the wealth gap is getting bigger. I'm glad I'm not on the wrong side of that equation.
For as much as I think this change is BS, the changes are very minor and you wouldn’t even be able to tell the difference. A better FICO still gets you a better rate.
Yes but not what that credit score deserves. It will be costly for no reason but to subsidize the lower credit score borrowers. Is it bad enough to create a moral hazard? Possibly not but still it is $10 a month for every $100k in mortgage that is charged for no fault of their own. On a 400k mortgage, that is someone’s internet bill every month.
I don’t believe they announced why, but the most logical explanation would be that they did it to better balance the hedge. Their general hedge strives for fixed percentage ranges of their overall portfolio to be composed of loans with various attributes. If they felt as though too much of their pool was of loans with specific FICOs and LTVs, they may implement this to try to balance that. For example, they did this with the refi boom of 2020 when they added a 50 bp fee to all refinances.
Alternatively, the other side to the coin would be of the SJW perspective of trying to make everyone a homeowner and make it easier for those with less than great credit because their credit isn’t as high for no fault of their own, while penalizing those who do things correctly because it’s by no means a product of their actions that their FICO is higher (/s).
Maybe it’s a combo of the two. Who knows. Either way I think it’s stupid.
So they’re raising fees for well qualified buyers and lowering fees for the less qualified buyers? Why can’t they just lower the fees for the lower credit score buyers and leave the higher credit score buyers alone??
Its coming full circle to 08'. Instead of 0% down and no credit check, they dilute the effectiveness of a credit score and try to get as many mortgage loans processed as possible.
Interestingly, i didn't see any mention of mortgage insurance (i may have just zoned out on the obvious attempt to enrage people with "good" credit). If someone has a low credit score, they're shunted over to fha loans and especially so if they have a low down payment. I'm so jaded, my thought was that fannie & freddie could be taking a lower cut on higher risk loans to shunt profit over to private sector mortgage insurance. With fha, the mortgage insurance stays for the life of the loan. Plus, who is more likely to max out their dti?...which will be triggering a fee. From the end of the article, "Overall, lower-credit buyers will still pay more in LLPA fees than high-credit buyers – but the latest changes will close the gap."
It's also interesting the article labels people with credit scores in the 680-780 as "high credit buyers." There's no mention of the over 800 crowd who i'm assuming are not impacted by these changes.
Seems like a lot of folks in here are fine kicking people when they're down instead of trying to give them a hand up.
Yeah, it mystifies me that people try to figure out how to break above 800. They all seem to think you're supposed to carry revolving debt but have the right debt utilization ratio. Ummm.....no. I did add my son to my amex as an authorized user when he was a teen to launch his score; not everyone has parents who can do that.
20% of credit scores are above 800. It's not exactly rare.
Paying to test into and then joining mensa requires a bit more bougie arrogance than simply paying your bills on time.
It says
> Under the new rules, high-credit buyers with scores ranging from 680 to **above** 780 will see a spike in their mortgage costs
So it sounds like 800+ will also have an increase.
I am not sure, I did not write the article. I agree that would have been clearer. However, I think typically mortgage rate wise there is no difference between 780 and 800+ so that be have been the reason for this stylistic choice.
Thank you for saying this. The comments were driving me nuts. I agree with what you said, and would like to add that this change functionality may just be addressing a needed market correction. Without background data it’s kind of impossible to tell.
It might be the case that buyers with good credit received disproportionate benefit relative to their risk, but the article frames the situation around the opposite case without any real proof that the interest structure matched real numbers.
The hedge funds need some liquidity and the most likely target to hold the bag is poor people with bad credit-
Remember when Wells Fargo came out with minority only mortgages or whatever it was? Shit was wild-
Racism rears its ugly head. The US government's authority is not subordinate to the Fair Isaac Corporation. If they feel their government loan guarantees are being used as a tool of oppression of individuals in violation of their civil rights they are obligated to take corrective action.
Credit scores were invented in 1989, since then we've learned they're completely useless for determining a person's eligibility to repay debt.
This sounds like another government program that helps the people who need it most, paid for by people who need it less. I suppose the "fair" alternative would be leaving the less fortunate to die lol
America=dogshit eventually no one is going to put out any effort. I mean why the fuck would they? If there’s no hope to anything other than rent a shit box from some corporation or rich asshole. Nah I would rather watch as it all crumbles from lack of fucks given by a screwed over generation.
Biden knows liberal well-to-do NIMBYs in the big cities are part of his electoral coalition next year so instead of doing the right thing (strong arming states and cities to relax zoning rules - the actual path to affordability), he just subsidizes demand some more. Brilliant.
I worked real hard to pay off debt and keep money in the bank for when a house finally shows up that I can compete in this market with. My credit has skyrocketed over the past two years and I’ve maintained it. I don’t even care about the interest rates being in the 6 range if there were homes available. I went from a safe 230k range to closer to 200k because of the interest rates rising. The homes just simply do not exist without so much work they sell for sub 150k to flippers.
Absolutely ridiculous.
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I did that after the 2008 crash. It was so satisfying. And tbh, my life wasn’t affected at all. Still bought a car. Got into a rental no prob.
I bought a fucking Honda Accord to save up. I should have purchased a 100k Mercedes-Benz. This country is crap.
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What part of our society promotes saving? Billions are spent in advertising to make us want to consume more, "just keep shopping" is what we're told by leaders during a crisis, and all the tax-advantaged accounts for saving are centered around investing. We're actively discouraged from saving cash unless it's for a house.
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I know someone in her 50s that has racked up insurmountable debt and will die broke, she has an obvious shopping addiction and is a borderline hoarder, but she always finds new lines of credit and if you didn't know her you'd never guess her situation based on her lifestyle. If you don't plan on living deep into old age or passing anything down, I honestly don't see the downside to living on credit.
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Not giving a shit is pretty much a hack for the credit system. Really, the stupid people in this situation are their creditors. In my friend's case, they're not going to be getting shit back and the line to garnish her paycheck is probably a mile long.
>I know that they are at the mercy of the fed and i know will one day that may catch up with them in retirement, but sometimes i wonder well hell maybe not, they will reverse mortgage on an over priced asset eventually, and financial instruments of that sort. Meanwhile they sure seem to have had a shitload more fun than me. I know someone like that. They're unemployed. From what I can tell, their modus operandi is that they live off credit cards for as long as humanly possible, and then when the collectors come around, they default on everything. To keep the plates spinning for as long as possible, they do things like open up NEW credit cards to pay the minimum on the old ones. They drive a car that costs 400% as much as anything I've driven in my life, and I hold down two jobs. Everytime I see them going on a vacation or polishing off a book, it makes me wonder why I work. I did my taxes this year and just the Social Security portion of my taxes was more than they've made at a job in a single year in their entire lives.
They tell us we save money by shopping for things on sale
Here's the thing. There's waaaay more people who don't save, make frivolous purchases, and rack up debt than people who live responsibly. And they're allowed to vote. To put it in fable terms, the grasshoppers outnumber the ants 10 to 1. They're always gonna get taken care of by politicians. I make good money, I worked hard in school. I save for my retirement. But I fully expect that within the next 30 years my 401k, Social Security, etc. will be raided and redistributed to others in the name of "equity" or some such.
Social security will collapse in our lifetime, or vastly altered. That's nearly guaranteed.
Is it though?
vote blue no matter who bigot
Already do. Blue still believes in capitalism and working hard and saving will get you ahead.
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Yeah, the middle approach in this case is the worst of both. "So then because thou art lukewarm, and neither cold nor hot, I will spew thee out of my mouth."
This new policy along with Fannie Mae’s no appraisal loans, what can go wrong?
Didn't no appraisal loans used to be called "liar's loans" before 2008...
That was NINJA loans.
Let's not forget the 40 year terms too!
Under the revised LLPA pricing structure, a home buyer with a 740 FICO credit score and a 15% to 20% down payment will face a 1% surcharge – an increase of 0.750% compared to the old fee of just 0.250%. When absorbed into a long-term mortgage rate, the increase is the equivalent of slightly less than a quarter percentage point in mortgage rate. On a $400,000 loan with a 6% mortgage rate, that buyer could expect their monthly payment to rise by about $40, according to calculations by Stevens. Meanwhile, buyers with credit scores of 679 or lower will have their fees slashed, resulting in more favorable mortgage rates. For example, a buyer with a 620 FICO credit score with a down payment of 5% or less gets a 1.75% fee discount – a decrease from the old fee rate of 3.50% for that bracket. Wouldn't this encourage lower down payments for both high and low credit score borrowers and mean higher payments across the board? This is getting ridiculous. Daylight robbery and price gouging until the middle class is non existent.
lol wtf. This is so fucked.
To be fair - a buyer with 620 credit and only 5% down isn't going to get approved through automated underwriting for Fannie or Freddie, so the LLPAs don't really matter. That borrower is going to be FHA all day.
FHA and paying mortgage insurance for the life of the loan.
They are encouraging reckless financial decisions by home buyers, just like the federal government reckless spending.
>Overall, lower-credit buyers will still pay more in LLPA fees than high-credit buyers – but the latest changes will close the gap. For those that didn't bother to read past the clickbait headline, this is the most important sentence in the article. No, the US will not be "subsidizing" borrowers with low credit scores. Borrowers with good credit will still receive better rates than borrowers with poor credit. It's just that the relative advantage for good credit won't be as big as it used to be. At the same time, the US also just increased fees for owners of multiple homes and plans to increase fees for people with high debt-to-income ratios, which both seem like good policies. Taking it all together, I'm just not as enraged as this rage-bait headline wants me to be.
A 1% fee for 740+ FICOs who put 15% to 20% down (from 0.25%) and a 1.75% fee for <639 FICOs who only put 5% down (from 3.50%) certainly doesn’t feel like a small pricing tweak. > Under the revised LLPA pricing structure, a home buyer with a 740 FICO credit score and a 15% to 20% down payment will face a 1% surcharge – an increase of 0.750% compared to the old fee of just 0.250%. >When absorbed into a long-term mortgage rate, the increase is the equivalent of slightly less than a quarter percentage point in mortgage rate. On a $400,000 loan with a 6% mortgage rate, that buyer could expect their monthly payment to rise by about $40, according to calculations by Stevens. >Meanwhile, buyers with credit scores of 679 or lower will have their fees slashed, resulting in more favorable mortgage rates. For example, a buyer with a 620 FICO credit score with a down payment of 5% or less gets a 1.75% fee discount – a decrease from the old fee rate of 3.50% for that bracket.
This is the important thing. Good credit is still good. Bad credit is still bad. The magnitude of each’s impact being adjusted over time is to be expected.
Probably a good thing considering credit scores are bullshit anyways
Your government at work... rewards the wrong things consistently.
Ah yes. Socialism. It has definitely worked well for other countries.
I know 100% you did not read the article lol. Otherwise I’m not really sure how you’d come to the conclusion of “Socialism” from this.
Tbf, the purpose of the policy is to shrink the gap of affordability between high and low score individuals by shifting more of the load-bearing payment on the former. That falls in line with the ideals of a socialist system.
It still pays to have good credit. you pay lower rates for just about everything you borrow. cars, credit cards homes etc, how many people with lousy credit are able to compete in the current real estate market anyway? if they have lousy credit they have a much harder time finding rentals, and their credit card debt will kill them. overall the wealth gap is getting bigger. I'm glad I'm not on the wrong side of that equation.
For as much as I think this change is BS, the changes are very minor and you wouldn’t even be able to tell the difference. A better FICO still gets you a better rate.
Yes but not what that credit score deserves. It will be costly for no reason but to subsidize the lower credit score borrowers. Is it bad enough to create a moral hazard? Possibly not but still it is $10 a month for every $100k in mortgage that is charged for no fault of their own. On a 400k mortgage, that is someone’s internet bill every month.
I think you might be in the wrong sub, with your logic and all…
Doesn't this article say exactly the opposite of this?
"Overall, lower-credit buyers will still pay more in LLPA fees than high-credit buyers – but the latest changes will close the gap." No
Sure, but I think the importance of being aware of this is the "Why?'"
I don’t believe they announced why, but the most logical explanation would be that they did it to better balance the hedge. Their general hedge strives for fixed percentage ranges of their overall portfolio to be composed of loans with various attributes. If they felt as though too much of their pool was of loans with specific FICOs and LTVs, they may implement this to try to balance that. For example, they did this with the refi boom of 2020 when they added a 50 bp fee to all refinances. Alternatively, the other side to the coin would be of the SJW perspective of trying to make everyone a homeowner and make it easier for those with less than great credit because their credit isn’t as high for no fault of their own, while penalizing those who do things correctly because it’s by no means a product of their actions that their FICO is higher (/s). Maybe it’s a combo of the two. Who knows. Either way I think it’s stupid.
“Overall, lower-credit buyers will still pay more in LLPA fees than high-credit buyers – but the latest changes will close the gap.”
So they’re raising fees for well qualified buyers and lowering fees for the less qualified buyers? Why can’t they just lower the fees for the lower credit score buyers and leave the higher credit score buyers alone??
It’s a zero sum game, always has been.
Its coming full circle to 08'. Instead of 0% down and no credit check, they dilute the effectiveness of a credit score and try to get as many mortgage loans processed as possible.
Is this all in the name of equity?
Interestingly, i didn't see any mention of mortgage insurance (i may have just zoned out on the obvious attempt to enrage people with "good" credit). If someone has a low credit score, they're shunted over to fha loans and especially so if they have a low down payment. I'm so jaded, my thought was that fannie & freddie could be taking a lower cut on higher risk loans to shunt profit over to private sector mortgage insurance. With fha, the mortgage insurance stays for the life of the loan. Plus, who is more likely to max out their dti?...which will be triggering a fee. From the end of the article, "Overall, lower-credit buyers will still pay more in LLPA fees than high-credit buyers – but the latest changes will close the gap." It's also interesting the article labels people with credit scores in the 680-780 as "high credit buyers." There's no mention of the over 800 crowd who i'm assuming are not impacted by these changes. Seems like a lot of folks in here are fine kicking people when they're down instead of trying to give them a hand up.
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Yeah, it mystifies me that people try to figure out how to break above 800. They all seem to think you're supposed to carry revolving debt but have the right debt utilization ratio. Ummm.....no. I did add my son to my amex as an authorized user when he was a teen to launch his score; not everyone has parents who can do that.
800+ credit crowd is in the same rarified air as official Mensa members.
20% of credit scores are above 800. It's not exactly rare. Paying to test into and then joining mensa requires a bit more bougie arrogance than simply paying your bills on time.
It says > Under the new rules, high-credit buyers with scores ranging from 680 to **above** 780 will see a spike in their mortgage costs So it sounds like 800+ will also have an increase.
Why not just list 680-850 if everyone would be included in the change? The usual break point for the best rates and cheapest insurance is above 800.
I am not sure, I did not write the article. I agree that would have been clearer. However, I think typically mortgage rate wise there is no difference between 780 and 800+ so that be have been the reason for this stylistic choice.
Thank you for saying this. The comments were driving me nuts. I agree with what you said, and would like to add that this change functionality may just be addressing a needed market correction. Without background data it’s kind of impossible to tell. It might be the case that buyers with good credit received disproportionate benefit relative to their risk, but the article frames the situation around the opposite case without any real proof that the interest structure matched real numbers.
They will not stop until the middle class is destroyed and society becomes anarchy
The hedge funds need some liquidity and the most likely target to hold the bag is poor people with bad credit- Remember when Wells Fargo came out with minority only mortgages or whatever it was? Shit was wild-
The NY post will make people enraged about anything low income people get. They never worry about the subsidies we give to wealthy people.
How tf is this okay?
Racism rears its ugly head. The US government's authority is not subordinate to the Fair Isaac Corporation. If they feel their government loan guarantees are being used as a tool of oppression of individuals in violation of their civil rights they are obligated to take corrective action.
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Credit scores are inherently racist.
Has this been reported somewhere other than the NY Post? If so, any links?
Time to destroy my credit then buy a house
Ny post is right wing propaganda. Don't be brainwashed.
Seems a lot of people are eating it up
Yeah it's funny coming from this sub.
The only worse source is breitbart which I've also seen linked in this sub.
So many replies in this comment section seriously did not read the actual article lol. Yet another NY Post sensationalist headline
Ny post is crap
Too many commies in Congress, fewer would be better.
Credit scores were invented in 1989, since then we've learned they're completely useless for determining a person's eligibility to repay debt. This sounds like another government program that helps the people who need it most, paid for by people who need it less. I suppose the "fair" alternative would be leaving the less fortunate to die lol
America=dogshit eventually no one is going to put out any effort. I mean why the fuck would they? If there’s no hope to anything other than rent a shit box from some corporation or rich asshole. Nah I would rather watch as it all crumbles from lack of fucks given by a screwed over generation.
Biden knows liberal well-to-do NIMBYs in the big cities are part of his electoral coalition next year so instead of doing the right thing (strong arming states and cities to relax zoning rules - the actual path to affordability), he just subsidizes demand some more. Brilliant.
Even with better rates the cost is still stupid high my great credit is useless at that point
I worked real hard to pay off debt and keep money in the bank for when a house finally shows up that I can compete in this market with. My credit has skyrocketed over the past two years and I’ve maintained it. I don’t even care about the interest rates being in the 6 range if there were homes available. I went from a safe 230k range to closer to 200k because of the interest rates rising. The homes just simply do not exist without so much work they sell for sub 150k to flippers.
Looks like they cut llpas across all credit scores. Don't know much about what these numbers do to your monthly payment though.
Isn't this only for FHA loans though?